* CEO to leave before her contract expires
* Telkom struggling to turnaround
* Shares fall more than 2 pct
(Adds analyst comment, shares)
By Helen Nyambura-Mwaura and Tiisetso Motsoeneng
JOHANNESBURG, Nov 5 South Africa's biggest
fixed-line phone company Telkom SA lost its fifth chief
executive in seven years on Monday, less than a month after the
departure of its chairman and several directors.
The future of the state-controlled telecom, whose shares are
down 40 percent this year, has been thrown into doubt by
tentative government plans to renationalise and force it to push
through a costly expansion of rural internet access.
The government in June also rejected a $385 million bid for
20 percent of the company from South Korean group KT Corp
Telkom, the bigggest fixed-line operator in Africa, said
that Chief Executive Nombulelo Moholi had given her six months
notice, meaning she will depart in May, about a year before her
contract was due to expire.
The government - which owns a near 40 percent stake and a
further 10.5 percent through the state pension fund - has
discussed ways to finance a buy-out and its communications
minister is due to present a report on the company's future to
"Telkom is quite a key asset for government. Since the
failure of the KT Corp deal, things started not to look great
for Telkom," said one analyst who did not want to be named.
"Based on that, and the strained relationship with the
government, maybe she (Moholi) decided to just step down."
Telkom's chairman and several board members also departed
following an annual general meeting last month.
Analysts have said the rejection of KT's offer underscored
the government's determination to keep control of a company that
many in the African National Congress view as a direct arm of
Local media had said Moholi's predecessor stepped down
because the government blocked him from making sweeping changes,
including job cuts.
Stung by declining fixed-line usage and an expensive, failed
attempt at expansion into Nigeria, Telkom has struggled to boost
It has launched an expensive mobile phone unit that has
struggled to win customers in a market dominated by Vodafone Plc
unit Vodacom and MTN Group.
The mobile business has yet to turn a profit two years after
Under Moholi, the company has lost more than half of its
market value. The stock is down nearly 40 percent so far this
year, compared to a near 20 percent gain in South Africa's main
stocks index over the same period.
Telkom did not give a reason for Moholi's departure and a
spokesman declined to comment further on the company's
statement, which said operational abilities would not be
"It was quite difficult to carry on doing a job with
everything that has been happening at the board and shareholder
level," said Steve Minnaar, portfolio manager at fund manager
"It is unfortunate because they are losing another
Telkom shares were down 3 percent to 17.65 rand by 1200 GMT,
lagging behind a 0.4 percent decline in the broader All-share
(Editing by Patrick Graham)